The Dewan Rakyat has passed the Energy Efficiency and Conservation Bill, which includes the requirement for mandatory energy audits of larger commercial and industrial electricity and gas consumers. This bill, which had been in development for nearly a decade, was approved during the third reading in the morning session of the Dewan Rakyat through a majority voice vote.
The current energy efficiency regulations only pertain to electricity and do not mandate audits.
Natural Resources, Environment and Climate Change Minister Nik Nazmi Nik Ahmad explained that through this bill, the government aims to emphasise demand-side management, which involves conducting energy supply and generation planning in a more comprehensive manner. This initiative contributes to the national climate change agenda.
Once enacted, the Energy Efficiency and Conservation Act (EECA) will oversee industrial and commercial users consuming 21,600 gigajoules of energy per year, roughly equivalent to RM2.4 million in annual electricity bills or RM1 million in natural gas bills. Compliance with the EECA is expected to lead to a reduction of electricity bills by up to 25%.
The EECA is projected to cover 1,500 out of 27,000 industrial consumers, accounting for 70% to 80% of industrial energy consumption, as well as 500 out of 1.7 million commercial consumers, representing 21% of the commercial segment’s energy consumption.
Additionally, it will require office buildings with a size of 8,000 square meters or larger to achieve a minimum two-star rating under the National Building Energy Label, indicating a building energy intensity of less than 250 kilowatt-hour/square meter annually. Currently, 300 government buildings meet these requirements. The EECA will also eventually extend its regulations to hotels and hospitals after further consultations by the ministry, covering an estimated 4,102 buildings under the law.
Once gazetted, the EECA will be enforced after 12 months, requiring consumers to conduct their initial energy audit. Subsequently, consumers will have a five-year period (one cycle) to meet the compliance requirements, and they will face penalties for non-compliance after the second audit. The penalties range from RM20,000 to RM100,000.
The average compliance cost for one cycle (five years), which includes appointing a registered energy manager, implementing energy management, and conducting energy audits, amounts to RM120,000 per year for affected industrial users and RM100,000 for commercial users.
Natural Resources, Environment and Climate Change Minister Nik Nazmi Nik Ahmad emphasised, “Six ASEAN countries already have energy efficiency regulation.” He also stated, “Through this Bill, the government will emphasise demand-side management, ensuring that energy supply and generation planning is conducted comprehensively and contributes to the national climate change agenda.”
The mandatory energy audit can be carried out by any registered energy auditor, with the intention of encouraging industrial and commercial consumers to incorporate energy managers and auditors into their talent pool for future compliance with the Act.
The final report on demand-side management was initially presented to the Cabinet in January 2018, and the Bill was proposed for tabling in Parliament in 2020 before a change in government. Subsequent delays occurred due to the COVID-19 pandemic.
